June 02, 2015 Articles

The Rule 23 Subcommittee Should Have Taken on Ascertainability

The question has long been considered a vital case management tool.

By Andrew Trask

Ascertainability—that is, the question of whether you can identify who is in a proposed class from the definition—occupies a distinctive place in class action doctrine. It has long been considered a vital case management tool. See Abbott v. Lockheed Martin Corp., 725 F.3d 803, 810 (7th Cir. 2013) (Wood, J.) ("The class definition is a tool of case management. It settles the question who the adversaries are, and so it enables the defendant to gauge the extent of its exposure to liability and it alerts excluded parties to consider whether they need to undertake separate actions in order to protect their rights."). While there is no formal mention of the ascertainability requirement in Rule 23, most court consider it an "essential" prerequisite for a class action. See Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 592–93 (3d Cir. 2012) ("[A]n essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3)), is that the class must be currently and readily ascertainable based on objective criteria."). And many treat it as a threshold inquiry before embarking on the formal Rule 23. See In re Fosamax Prods. Liab. Litig., 248 F.R.D. 389, 395 (S.D.N.Y. 2008) ("Rule 23 contains the additional, implicit requirement that an ascertainable class exists and has been properly defined."). In fact, the leading treatise on civil procedure addresses the question before it begins its discussion of the specific requirements of Rule 23(a). See 7A Charles Alan Wright et al., Federal Practice and Procedure § 1760, at 142–47 (3d ed. 2005) ("Further, the class must not be defined so broadly that it encompasses individuals who have little connection with the claim being litigated; rather it must be restricted to individuals who are raising the same claims or defenses as the representative. The class definition also cannot be too amorphous.") (footnotes omitted).

Now that the Judicial Conference's Committee on Rules of Practice and Procedure is in the process of considering potential changes to Rule 23, ascertainability has acquired another distinction. It is the only class action topic that the conference was specifically asked to consider by several federal judges. In a dissent from a refusal to rehear a case en banc—Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), which held that if a defendant does not have records of a proposed class, that class may not be ascertainable—Judge Thomas Ambro (joined by Chief Judge Theodore McKee and Judges Marjorie Rendell and Julio Fuentes) suggested

that the Judicial Conference's Committee on Rules of Practice and Procedure look into this matter. Rule 23 explicitly imposes limitations on the availability of class actions. Marcus [687 F.3d 583 (3d Cir. 2012)] adds another—that class membership is reasonably capable of being ascertained. If the Committee agrees with that, how easy (or how hard) must this identification be?

It would appear that the ascertainability requirement is ripe for formal inclusion in Rule 23. There is, for the most part, remarkable consensus among courts about the existence of some form of implied ascertainability requirement. See, e.g., EQT Prod. Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014); Marcus, 687 F.3d at 592–93; Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012); John v. Nat'l Sec. Fire & Gas. Co., 501 F.3d 443, 445 (5th Cir. 2007); Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006); In re Initial Pub. Offerings Secs. Litig., 471 F.3d 24, 30 (2d Cir. 2006) (finding an "implied requirement of ascertainability"); Xavier v. Philip Morris USA Inc., 787 F. Supp. 2d 1075 (N.D. Cal. 2011) (Alsup, J.).

The specific contours of that requirement are still up for debate, however. Most courts have held that a "fail-safe" class—that is, a class defined in terms of the ultimate merits of the claim, thus requiring a full trial on the merits to determine who is or is not a class member—is not ascertainable. See, e.g., Randleman v. Fid. Nat'l Title Ins. Co., 646 F. 3d 347, 352 (6th Cir. 2011) ("The class the district court initially certified was flawed in that it only included those who are 'entitled to relief.' This is an improper fail-safe class that shields the putative class members from receiving an adverse judgment. Either the class members win or, by virtue of losing, they are not in the class and, therefore, not bound by the judgment."); Adashunas v. Negley, 626 F.2d 600, 604 (7th Cir. 1980) ("The new class definition, if allowed, would result in a 'fail-safe' class, a class which would be bound only by a judgment favorable to plaintiffs but not by an adverse judgment."); Xavier, 787 F. Supp. 2d at 1089 ("Ascertainability is needed for properly enforcing the preclusive effect of final judgment. The class definition must be clear in its applicability so that it will be clear later on whose rights are merged into the judgment, that is, who gets the benefit of any relief and who gets the burden of any loss."); see also generally Erin L. Geller, "The Fail-Safe Class as an Independent Bar to Class Certification," 81 Fordham L. Rev. 2769, 2803–4 (2013) (arguing that allowing fail-safe classes revives one-way intervention). The Fifth Circuit, in contrast, has specifically held that fail-safe classes are acceptable. See In re Rodriguez, 695 F.3d 360, 370 (5th Cir. 2012) ("Because our precedent rejects the fail-safe class prohibition, we conclude that the bankruptcy court did not abuse its discretion when it defined the class in the present case.").

Similarly, in the past several years, courts have begun to split over the need for specific records from which one can glean class membership. On one side sits the Third Circuit's opinion in Carrera. On the other, various courts believe Carrera "eviscerates low purchase price consumer class actions in the Third Circuit." McCrary v. Elations Co., LLC, No. 13-00242 JGB, 2014 U.S. Dist. LEXIS 844, at *24 (C.D. Cal. Jan. 13, 2014).

But despite the controversies and despite the clear request for guidance from federal judges, the Judicial Conference's Subcommittee on Rule 23 has identified ascertainability as a "back burner" topic. It explained in its October 2014 report that, "For current purposes, in light of the likely difficulty of drafting rule provisions on class definition, the question is whether the problems described warrant making the effort." Rule 23 Subcommittee Report, in Agenda Book for Advisory Committee on Civil Rules, Washington, D.C., Oct. 30–31, 2014, at 499–588. And, indeed, when the subcommittee recently published its Concept Amendments for Rule 23, a statement on ascertainability was nowhere to be found.

It is hard to determine the "difficulties" that the subcommittee was worried about. It might be that the subcommittee believed that determining the exact contours of the requirement would prove a political flashpoint. (Most likely, they may have decided they did not want to wade into a debate over the scope of Carrera.)

The omission is unfortunate, though. Rationalizing Rule 23 by explicitly recognizing this "implicit" requirement would have been an easy win. And even if the language of the requirement addressed merits-based classes (in defiance of the Fifth Circuit) and embraced Carrera (less likely, but possible), it is hard to see how that would be a net loss for absent class members. If the plaintiffs cannot define their class without reference to the merits (the common "fail-safe" problem), or if they do not have any feasible way of identifying class members for notice, the proposed class action would likely be stillborn if certified. Moreover, the lack of a good class definition often speaks to deeper problems with a proposed class action. See, e.g., Steimel v. Minott, No. 1:13-cv-957-JMS-MJD, 2014 U.S. Dist. LEXIS 38228, at *50–54 (S.D. Ind. Mar. 24, 2014) (class definition could not be amended because underlying Rule 23 problems were too pervasive). Identifying these issues sooner rather than later is in everyone's interest.

Formalizing the ascertainability requirement is exactly the kind of high-return work the subcommittee should be focusing on: rationalizing Rule 23 and ensuring that it remains a vehicle for efficient representative actions. It's disappointing they chose to shy away from the perceived difficulty.

Keywords: litigation, class actions, ascertainability, Rule 23, amendment proposals

Andrew Trask – June 2, 2015